AFGEM, the South African gem-mining corporation that two years ago leased prime property in the Merelani tanzanite mines from the Tanzanian Department of Energy and Minerals, is finding itself at odds with its neighbors. AFGEM’s Block C is the largest mining area in the region, yielding the highest percentage of fine-quality rough tanzanite. The local village miners of Blocks D and B feel they have been wrongly cast away from the hillside of Block C, and that AFGEM has not lived up to its end of the bargain to acquire it.
The disputes have led AREMA (the Arusha Regional Mining Association, made up of three mining associations in Tanzania) to file a lawsuit against AFGEM, members of its directorate, and the previous Tanzanian Minister of Energy and Minerals.
The allegations relate to the legality of AFGEM’s mining license, taxes paid, alleged misconduct by AFGEM staff towards small-scale miners, and AFGEM’s alleged monopolization of the tanzanite market.
AFGEM disputes the claims.
A preliminary hearing is scheduled be held in Dar es Salaam on Monday.
According to Tanzanian news reports, the agreement between AFGEM and the Minister of Mines included having AFGEM create jobs for miners, improve local infrastructure such as roads and water supplies, furnish jobs in local cutting factories, and provide ”significant contributions to community development.” Little effort toward accomplishing these goals has been made, the news reports say. Local miners are also unhappy with AFGEM’s proposed branding of Tanzanite, which they see as having the potential to reduce the value of their unbranded gems.
Responding to these allegations, Joanne Herbstein, corporate communications officer for AFGEM, says that AFGEM’s property is ”one of the most sought-after gemstone properties in the world, so it stands to reason that certain members in the tanzanite industry would exhaust every avenue in trying to lay claim to it. Unfortunately, in our situation, these attempts have been centered around a host of unfounded allegations, in an effort to defame our company and gain access to our mining license area.”
”Our aim is to grow, develop, and formalize the tanzanite industry,” Herbstein says, ”adding value to all stakeholders, including the small miners, the community and the Tanzanian economy. This represents a shift in the status quo, and we are now dealing with significant resistance to that objective. Fortunately, the resistance is fueled by a small group of vested interests, and we are 100% supported by the Tanzanian government.”
However, reports broadcast on local media have told of AFGEM security forces shooting at hundreds of trespassers and letting dogs loose to protect property rights.
Herbstein describes the situation as protection of privacy when 1,500 miners trespassed onto Block C. ”About two weeks ago, 1,500 people invaded our property. The situation was managed by the Merelani Police commander. AFGEM’s security officers were under police control. The situation was very tense. Shots were fired. At one stage, the police ran out of ammunition and asked AFGEM’s security officers for assistance. The police were armed with automatic weapons. Four of AFGEM’s security officers were armed with shotguns loaded with birdshot only.”
According to Herbstein, six trespassers were injured, treated by AFGEM’s on-site medical officer, and then transported to the local hospital by AFGEM’s personnel. ”There were no serious injuries, and no deaths.”
Herbstein confirms that AFGEM does have guard dogs, but trained only for the purpose of guarding fenced restricted areas at night. ”Dogs have absolutely never been used for any other purpose,” exclaims Herbstein. ”We have a strict policy in place that is quite specific in terms of the guard dogs and their handling.”
Other allegations include suggestions that AFGEM is smuggling tanzanite. ”As a public company, all of our export figures are 100% up-to-date, and we are also completely up-to-date in terms of the royalties we have paid the Tanzanian government,” says Herbstein. ”Our tanzanite exits Tanzania through the appropriate channels-always has and always will. The irony is that the miners’ associations that have made these baseless allegations represent a community of mining operations that are certainly not as legitimate as we are.” According to AFGEM, the tanzanite market is $150 million per year, yet the export figures show only $8 million. ”It is glaringly apparent that smuggling is occurring and that Tanzania is losing significant amounts of money because of it,” says Herbstein. AFGEM sees its role as helping the government acquire ”their full value out of its natural mineral wealth.”
As far as aid to the Tanzanian infrastructure, AFGEM says it is 75% through with the rebuilding of a 14km service road between Kilimanjaro Airport and Nasinyai Village at a cost to date of $15,000.
”AFGEM has built two cattle dams, laid water provision piping, and contributed toward the repairs of water borehole facilities in the local village,” claims Herbstein. ”AFGEM has also provided electricity to the local clinic as well as internal wiring for lights and plugs. Significant resources have been spent on rebuilding a new staff village. Also, we have identified the Nasinyai School as a community development project, which will be initiated and actioned this year. We are also investing much money in a branding and marketing campaign that will grow the global market for tanzanite, benefiting all players in the industry.”
Herbstein adds, ”We are doing so much good and are very committed to our investment in Tanzania, but it is becoming more and more frustrating to manage the small band of influential people that are set on sabotaging our project. We have submitted solid counter-affidavits and supporting evidence to the courts and await a hearing on Monday. Our case is airtight. We can only trust that the system is too.”